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When Extrapolating a Curve

The dictionary says that extrapolating means to extend by inferring unknown values from trends in the known data. I might also say that extrapolating means making stuff up based on what you have observed before. An assumption that what has happened in the past is an indicator of the future, when at best it is a guess; maybe one that does have some likelihood of happening. While the past may not directly repeat itself, it might just be an indication of what is possible or likely in the future. Just remind yourself that extrapolating is still a guess rather than a guaranteed certainty.

The Trend Is Your Friend: Really?
I recently attended a NLA regional meeting for landlords in and around London. The event was sponsored by Edmond Cude, a London letting specialist since 1818. Maybe they know something or maybe they are just an old firm.

During the evening there were two presentations I want to highlight and both were delivered by Edmond Cude representatives. One presentation highlighted the sold price trends for residential housing in London and then contrasted those with recent achieved rents in London. When you look at the last year, average house prices in London are actually up but rents are dramatically higher. At least that is what the London average looks like when you blend the data. When you drill down a level to look at information at the borough level, you see a much more confused message. Broadly speaking, only two boroughs have seen a significant price rise, so only 2 boroughs out of 32, which leaves 30 boroughs that are broadly flat or are below the prior market peak in 2007/8.

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